Competing lawsuits delay settlement for Madoff victims: report

By IBT Staff Reporter On 08/04/10 AT 9:24 AM

A multibillion-dollar settlement to the victims of Bernard Madoff's Ponzi scheme has been held up by lawsuits competing for the same funds from the estate of the late investor and philanthropist Jeffry Picower, the Wall Street Journal reported.

Irving Picard, the trustee in charge of recovering money for Madoff victims, had earlier said he would settle with the Picower estate. The settlement amount could be about $2 billion under bankruptcy law.

The potential Picower settlement would significantly add to the $1.5 billion that the trustee has recovered so far for thousands of investors defrauded by Madoff.

Picower, a longtime friend of Madoff, was found dead in his Florida swimming pool last October.

The trustee had originally sought as much as $7.2 billion from Picower, his wife Barbara and various trusts and charities he ran. Picard alleged that Picower was complicit in the fraud and described him as the biggest beneficiary of Madoff's decades-long scheme.

The negotiations to recover the money have been stalled largely over a pair of lawsuits against the Picower estate in federal court in Florida, the Journal said.

Picard had earlier rejected claims of some Madoff victims on the grounds that they were based on fictitious profits and not actual losses. A group of those investors in turn filed lawsuits against Picower estate to recover the money that they could not get out of Picard, the paper said.

William Zabel, a lawyer representing Picower's estate, told the Journal that he is still actively engaged in negotiations with Picard, but would not settle without a ban on other Madoff-related litigation against the Picower estate.

We are not about to settle for more than $2 billion and then be sued by other people for billions, Zabel told the Journal.

Reuters could not immediately reach Zabel and Picard for comment outside regular U.S. business hours.

Madoff is serving a 150-year prison sentence after pleading guilty in March 2009 to orchestrating a fraud that U.S. prosecutors estimated at as much as $65 billion.